Oil cartel not ready to cut production – OPEC

OPEC Secretary-General Abdullah al-Badri said Thursday the oil producers’ cartel is not planning to cut production despite the fall in crude prices over recent months and concerns about the possible addition of Iranian oil in the market.

“We met in December last year and we met in June this year. We decided to keep our production at 30 million barrels a day, the same as before. We are not ready to reduce our production,” Badri said after a meeting in Moscow with Russia’s energy minister.

OPEC at its last meeting in Vienna in June kept its output levels despite a supply glut, extending the strategy of oil powerhouse Saudi Arabia which aims to preserve market share and fend off competition from booming U.S. shale.

Oil prices recently dropped to their lowest levels in months on the back of concerns over the global oversupply.

The fall followed a rebound in prices after a steep slump last year. Prices continued a slight recovery on Thursday following reports of a drop in U.S. stockpiles.

U.S. benchmark West Texas Intermediate (WTI) for delivery in September climbed 33 cents to $49.12 a barrel compared with Wednesday’s close, while Brent North Sea crude for September gained 65 cents to $54.03 a barrel in London afternoon trade.

OPEC and Russia said in a joint statement after Thursday’s talks that indicators pointed to a possible “more balanced situation on the oil market and its stabilization” in 2016.

However the possible return next year of oil from Iran following the landmark nuclear energy deal with world powers this month could create fresh tensions within OPEC, analysts say.

The accord paves the way for the removal of sanctions and the gradual return of Iranian oil to the global market in 2016.

The Organization of the Petroleum Exporting Countries – whose 12 members including Iran pump one third of global oil – is mindful that Iranian oil could worsen a global supply glut and depress oil prices further.

Badri, however, insisted that OPEC welcomed the lifting of sanctions on Iran and would be able to cope with any increased volumes.

“We are really happy that sanctions are on their way to be over for Iran. Now we don’t have any country under sanctions in our organization,” he told journalists.

“I think the quantity that is in question, I think our group will accommodate them.”

Russia’s economy has acutely felt the tribulations of the global energy market, slumping into recession over low oil prices and Western sanctions tied to the Ukraine crisis.

The Russian ruble plummeted this week to its lowest point since March as oil prices dropped, sparking fears that inflation could spiral out of control.

Russia’s central bank was forced to halt its purchase of foreign currency – a way to replenish the reserves it spent on bolstering the battered ruble – in order to curb volatility on the currency market.

Russian energy minister Novak said that coordination between OPEC and Russia, the world’s largest oil producer outside the cartel, had not been discussed in detail.

“The question of lowering production is very difficult for Russia, many countries feel that this is not necessary,” he said.